By: Patrick	S.B. No. 127

	A BILL TO BE ENTITLED
	AN ACT
	relating to the establishment, operation, and funding of charter
	schools; providing administrative penalties.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1.  The heading to Section 12.101, Education Code,
	is amended to read as follow:
	Sec. 12.101.  AUTHORIZATION FOR LICENSE.
	SECTION 2.  Section 12.101, Education Code, is amended by
	amending Subsections (a), (b), and (d) and adding Subsections (e)
	and (f) to read as follows:
	(a)  In accordance with this subchapter, the State Board of
	Education may issue [grant] a license [charter] on the application
	of an eligible entity for an open-enrollment charter school to
	operate in a facility of a commercial or nonprofit entity, an
	eligible entity, or a school district, including a home-rule school
	district. In this subsection, "eligible entity" means:
	(1)  an institution of higher education as defined
	under Section 61.003;
	(2)  a private or independent institution of higher
	education as defined under Section 61.003;
	(3)  an organization that is exempt from taxation under
	Section 501(c)(3), Internal Revenue Code of 1986 (26 U.S.C. Section
	501(c)(3)); or
	(4)  a governmental entity.
	(b)  The State Board of Education, after thoroughly
	investigating and evaluating an applicant, may issue [grant] a
	license [charter] for an open-enrollment charter school only to an
	applicant that meets any financial, governing, curriculum
	development and implementation, and operational standards adopted
	by the commissioner under this subchapter. In a state fiscal year,
	the [The] State Board of Education may not issue [grant a total of]
	more than 10 new licenses [215 charters] for an open-enrollment
	charter school plus a number of licenses equal to any number of
	charters for an open-enrollment charter school revoked or
	surrendered during the preceding state fiscal year.
	(d)  An educator employed by a school district before the
	effective date of a license [charter] for an open-enrollment
	charter school operated at a school district facility may not be
	transferred to or employed by the open-enrollment charter school
	over the educator's objection.
	(e)  A license holder is subject to any law applicable to a
	charter holder.
	(f)  The commissioner shall adopt rules for applying for a
	license, notification of a license application, the form and
	content of a license, the basis and a procedure for modification or
	revocation of license, and any other rules necessary for the
	issuance and administration of licenses under this subchapter. A
	rule adopted under this subsection must, to the greatest extent
	practicable, be consistent with a provision of this subchapter or a
	rule adopted under this subchapter for the same purpose as
	applicable to a charter.
	SECTION 3.  Subchapter D, Chapter 12, Education Code, is
	amended by adding Sections 12.1011 and 12.10111 to read as follows:
	Sec. 12.1011.  AUTHORIZATION FOR ISSUANCE OF LICENSES FOR
	SCHOOLS PRIMARILY SERVING STUDENTS WITH DISABILITIES.  (a)  The
	State Board of Education may issue under Section 12.101 a license on
	the application of an eligible entity for an open-enrollment
	charter school intended primarily to serve students with
	disabilities, including students with autism.  The State Board of
	Education may not issue more than two new licenses for an
	open-enrollment charter school under this section each state fiscal
	year.  A license issued under this section is not considered for
	purposes of the limit on the number of open-enrollment charter
	schools imposed by Section 12.101(b).
	(b)  For purposes of the applicability of state and federal
	law, including a law prescribing requirements concerning students
	with disabilities, an open-enrollment charter school described by
	Subsection (a) is considered the same as any other school for which
	a license is issued under Section 12.101.
	(c)  To the fullest extent permitted under federal law, a
	parent of a student with a disability may choose to enroll the
	parent's child in an open-enrollment charter school described by
	Subsection (a) regardless of whether a disproportionate number of
	the school's students are students with disabilities.
	(d)  This section does not authorize an open-enrollment
	charter school to discriminate in admissions or in the services
	provided based on the presence, absence, or nature of an
	applicant's or student's disability.
	Sec. 12.10111.  AUTHORIZATION FOR CHARTER. (a)  The State
	Board of Education may grant a charter for an open-enrollment
	charter school to a license holder under Section 12.101 if:
	(1)  the open-enrollment charter school for which the
	license has been issued has been assigned an acceptable performance
	rating as provided by Subchapter C, Chapter 39, for any two of the
	preceding three school years;
	(2)  no campus operating under the license has been
	assigned an unacceptable performance rating as provided by
	Subchapter C, Chapter 39, for any two of the three preceding school
	years or such a campus has been closed; and
	(3)  the license holder satisfies generally accepted
	accounting standards of fiscal management.
	(b)  For purposes of Subsection (a), a license holder is
	considered to have failed to satisfy generally accepted accounting
	standards of fiscal management if, after consideration of all
	information required for determining whether those standards have
	been satisfied, the commissioner, in accordance with commissioner
	rule, determines that:
	(1)  the open-enrollment charter school for which the
	license has been issued is insolvent as a result of the recovery of
	over-allocated state funds under Section 42.258(a); or
	(2)  there is a material weakness in the school's annual
	financial audit.
	(c)  Notwithstanding Section 12.101, the State Board of
	Education may grant a charter for an open-enrollment charter school
	to an applicant for a charter that has operated one or more charter
	schools in another state and, as determined by the commissioner in
	accordance with commissioner rule, has performed well under federal
	accountability and other appropriate academic and financial
	criteria.
	(d)  A charter holder may establish one or more new
	open-enrollment charter school campuses under a charter without
	applying for authorization if:
	(1)  each open-enrollment charter school campus
	operating under the charter has been assigned an acceptable
	performance rating as provided by Subchapter C, Chapter 39, for the
	two preceding school years;
	(2)  the charter holder satisfies standards of fiscal
	solvency and financial accountability established by commissioner
	rule;
	(3)  the charter holder provides written notice, in the
	time, manner, and form provided by commissioner rule, to the State
	Board of Education and the commissioner of the establishment of any
	campus under this subsection; and
	(4)  not later than the 90th day after the date the
	charter holder provides written notice under Subdivision (3), the
	commissioner does not provide written notice to the charter holder
	disapproving a new campus under this section.
	(e)  For purposes of Subsection (d), an open-enrollment
	charter school campus rated as academically acceptable or higher
	under Subchapter D, Chapter 39, as that subchapter existed January
	1, 2009, for the 2009-2010 or 2010-2011 school year is considered to
	have been assigned an acceptable performance rating for the
	applicable school year.  This subsection expires January 1, 2015.
	SECTION 4.  Section 12.1012, Education Code, is amended by
	adding Subdivision (7) to read as follows:
	(7)  "License holder" means the entity to which a
	license is granted under this subchapter.
	SECTION 5.  Section 12.110, Education Code, is amended by
	adding Subsection (e) to read as follows:
	(e)  The commissioner by rule may establish a fee for
	applying for a license or charter for an open-enrollment charter
	school.  A fee established under this subsection must be sufficient
	to cover the agency's administrative costs for the application
	process, including the costs of investigating the applicant.
	SECTION 6.  Section 12.1101, Education Code, is amended to
	read as follows:
	Sec. 12.1101.  NOTIFICATION OF CHARTER APPLICATION OR
	ESTABLISHMENT OF CAMPUS. The commissioner by rule shall adopt a
	procedure for providing notice to the following persons on receipt
	by the State Board of Education of an application for a charter for
	an open-enrollment charter school under Section 12.110 or on
	receipt by the board and the commissioner of notice of the
	establishment of a campus as authorized under Section 12.10111(d):
	(1)  the board of trustees of each school district from
	which the proposed open-enrollment charter school or campus is
	likely to draw students, as determined by the commissioner; and
	(2)  each member of the legislature that represents the
	geographic area to be served by the proposed school or campus, as
	determined by the commissioner.
	SECTION 7.  Section 12.111, Education Code, is amended by
	amending Subsection (a) and adding Subsection (c) to read as
	follows:
	(a)  Each charter granted under this subchapter must:
	(1)  describe the educational program to be offered,
	which must include the required curriculum as provided by Section
	28.002;
	(2)  specify the period for which the charter or,
	consistent with Section 12.116(b-1), any charter renewal is valid;
	(3)  provide that continuation or renewal of the
	charter is contingent on the status of the charter as provided by
	Section 12.116(b-1) [acceptable student performance on assessment
	instruments adopted under Subchapter B, Chapter 39, and on
	compliance with any accountability provision specified by the
	charter, by a deadline or at intervals specified by the charter];
	(4)  [establish the level of student performance that
	is considered acceptable for purposes of Subdivision (3);
	[(5)]  specify any basis, in addition to a basis
	specified by this subchapter, on which the charter may be placed on
	probation or revoked or on which an alternative to revoking the
	charter, as described by Section 12.115(a-1), may be used [renewal
	of the charter may be denied];
	(5) [(6)]  prohibit discrimination in admission policy
	on the basis of sex, national origin, ethnicity, religion,
	disability, academic, artistic, or athletic ability, or the
	district the child would otherwise attend in accordance with this
	code, although the charter may:
	(A)  provide for the exclusion of a student who
	has a documented history of a criminal offense, a juvenile court
	adjudication, or discipline problems under Subchapter A, Chapter
	37; and
	(B)  provide for an admission policy that requires
	a student to demonstrate artistic ability if the school specializes
	in performing arts;
	(6) [(7)]  specify the grade levels to be offered;
	(7) [(8)]  describe the governing structure of the
	program, including:
	(A)  the officer positions designated;
	(B)  the manner in which officers are selected and
	removed from office;
	(C)  the manner in which members of the governing
	body of the school are selected and removed from office;
	(D)  the manner in which vacancies on that
	governing body are filled;
	(E)  the term for which members of that governing
	body serve; and
	(F)  whether the terms are to be staggered;
	(8) [(9)]  specify the powers or duties of the
	governing body of the school that the governing body may delegate to
	an officer;
	(9) [(10)]  specify the manner in which the school will
	distribute to parents information related to the qualifications of
	each professional employee of the program, including any
	professional or educational degree held by each employee, a
	statement of any certification under Subchapter B, Chapter 21, held
	by each employee, and any relevant experience of each employee;
	(10) [(11)]  describe the process by which the person
	providing the program will adopt an annual budget;
	(11) [(12)]  describe the manner in which an annual
	audit of the financial and programmatic operations of the program
	is to be conducted, including the manner in which the person
	providing the program will provide information necessary for the
	school district in which the program is located to participate, as
	required by this code or by State Board of Education rule, in the
	Public Education Information Management System (PEIMS);
	(12) [(13)]  describe the facilities to be used;
	(13) [(14)]  describe the geographical area served by
	the program; and
	(14) [(15)]  specify any type of enrollment criteria to
	be used.
	(c)  The enrollment of a student with a disability, including
	autism, is not considered for purposes of any maximum student
	enrollment described by the charter.
	SECTION 8.  Section 12.115, Education Code, is amended to
	read as follows:
	Sec. 12.115.  BASIS FOR MODIFICATION, PLACEMENT ON
	PROBATION, OR REVOCATION; ALTERNATIVES TO REVOCATION[, OR DENIAL OF
	RENEWAL].  (a)  The commissioner shall [may] modify, place on
	probation, or revoke[, or deny renewal of] the charter of an
	open-enrollment charter school if the commissioner determines that
	the charter holder:
	(1)  committed a material violation of the charter,
	including failure to satisfy accountability provisions prescribed
	by the charter;
	(2)  failed to satisfy generally accepted accounting
	standards of fiscal management;
	(3)  failed to protect the health, safety, or welfare
	of the students enrolled at the school; or
	(4)  failed to comply with this subchapter or another
	applicable law or rule.
	(a-1)  Based on a determination described by Subsection (a)
	concerning the charter holder, as an alternative to revoking the
	charter of an open-enrollment charter school, the commissioner may:
	(1)  reconstitute the governing body of the charter
	holder; or
	(2)  assign operations of a school campus to a
	different charter holder.
	(b)  The action the commissioner takes under Subsection (a)
	or (a-1) shall be based on:
	(1)  the best interest of the school's students;
	(2)  [,] the severity of the violation[,] and any
	previous violation the school has committed; and
	(3)  the accreditation status of the school under
	Subchapter C, Chapter 39.
	SECTION 9.  Section 12.116, Education Code, is amended to
	read as follows:
	Sec. 12.116.  PROCEDURE FOR MODIFICATION, PLACEMENT ON
	PROBATION, REVOCATION, ALTERNATIVE TO REVOCATION, OR DENIAL OF
	RENEWAL.  (a)  The commissioner shall adopt a procedure [to be
	used] for modifying, placing on probation, revoking, or denying
	renewal of the charter of an open-enrollment charter school or for
	using an alternative to revocation as described by Section
	12.115(a-1).
	[(b)]  The procedure [adopted under Subsection (a)] must,
	except as provided by Subsection (b), provide an opportunity for a
	hearing to the charter holder and to parents and guardians of
	students enrolled in the school. A hearing under this subsection
	must be held in the county in which the school is located [at the
	facility at which the program is operated].
	(a-1)  The commissioner shall revoke the charter of an
	open-enrollment charter school in accordance with the procedure
	adopted under Subsection (a) if, after all information required for
	determining a performance rating has been considered, the
	commissioner determines that the school is insolvent.  In
	determining whether the school is insolvent, the commissioner shall
	consider whether the insolvency is a result of recovery of
	overallocated state funds under Section 42.258(a).
	(b)  The commissioner shall revoke the charter of an
	open-enrollment charter school without a hearing if each campus
	operated under the school's charter has been ordered closed under
	Section 39.107.
	(b-1)  The procedure adopted under Subsection (a) for
	denying renewal of the charter of an open-enrollment charter school
	must provide that the charter automatically renews unless the
	school's charter is revoked under Subchapter E, Chapter 39, before
	the expiration of a charter term.  In addition, the procedure must
	require the commissioner and the charter holder to act in a timely
	manner, according to the procedure, to initiate revocation or
	renewal of the charter, as applicable.  The term for which a charter
	is renewed shall not be less than 10 years.
	(c)  Chapter 2001, Government Code, does not apply to a
	hearing that is related to a modification, placement on probation,
	revocation, alternative to revocation, or denial of renewal under
	this subchapter.
	SECTION 10.  Section 12.1161, Education Code, is amended to
	read as follows:
	Sec. 12.1161.  EFFECT OF REVOCATION[, DENIAL OF RENEWAL,] OR
	SURRENDER OF CHARTER. If [(a)     Except as provided by Subsection
	(b), if] the commissioner revokes the [or denies the renewal of a]
	charter of an open-enrollment charter school, or if an
	open-enrollment charter school surrenders its charter, the school
	may not:
	(1)  continue to operate under this subchapter; or
	(2)  receive state funds under this subchapter.
	[(b)     An open-enrollment charter school may continue to
	operate and receive state funds under this subchapter for the
	remainder of a school year if the commissioner denies renewal of the
	school's charter before the completion of that school year.]
	SECTION 11.  Subsection (a), Section 12.1164, Education
	Code, is amended to read as follows:
	(a)  The commissioner must notify the Teacher Retirement
	System of Texas in writing of the revocation[, denial of renewal,]
	or surrender of a charter under this subchapter not later than the
	10th business day after the date of the event.
	SECTION 12.  Section 12.117, Education Code, is amended by
	adding Subsection (c) to read as follows:
	(c)  An open-enrollment charter school for which a license is
	issued on or after September 1, 2011, may not admit a student unless
	the student:
	(1)  was enrolled in a public school in this state
	during the school year preceding the school year for which the
	student is seeking admission to the charter school; or
	(2)  is seeking admission for the first grade or a lower
	grade level.
	SECTION 13.  Subsection (a), Section 12.118, Education Code,
	is amended to read as follows:
	(a)  The commissioner shall designate an impartial
	organization with experience in evaluating school choice programs
	to conduct, under the supervision of the commissioner, an annual
	evaluation of open-enrollment charter schools.
	SECTION 14.  Subsection (c), Section 12.119, Education Code,
	is amended to read as follows:
	(c)  On request, the State Board of Education shall provide
	the information required by this section and Section 12.111(a)(7)
	[12.111(8)] to a member of the public.  The board may charge a
	reasonable fee to cover the board's cost in providing the
	information.
	SECTION 15.  Subchapter D, Chapter 12, Education Code, is
	amended by adding Section 12.136 to read as follows:
	Sec. 12.136.  ADMINISTRATIVE PENALTY. (a)  The
	commissioner may impose a reasonable administrative penalty
	against a person who knowingly violates this subchapter or a rule
	adopted under this subchapter.
	(b)  The commissioner shall provide for a hearing to be held
	to determine whether a penalty is to be imposed and, if so, the
	amount of the penalty. The commissioner shall base the amount of
	the penalty on:
	(1)  the seriousness of the violation;
	(2)  any history of a previous violation;
	(3)  the amount necessary to deter a future violation;
	(4)  any effort to correct the violation;
	(5)  the cost to the agency to address the violation,
	including providing a remedy in response to the violation; and
	(6)  any other matter justice requires.
	(c)  A hearing under Subsection (b) shall be held in
	accordance with commissioner rule.
	(d)  A penalty collected under this section may be used by
	the agency in paying costs of administering this subchapter.
	SECTION 16.  Section 12.156, Education Code, is amended to
	read as follows:
	Sec. 12.156.  APPLICABILITY OF CERTAIN PROVISIONS.
	(a)  Except as otherwise provided by this subchapter, Subchapter D
	applies to a college or university charter school or junior college
	charter school as though the college or university charter school
	or junior college charter school, as applicable, were issued a
	license or granted a charter under that subchapter.
	(b)  A license issued or charter granted under this
	subchapter is not considered for purposes of the limit on the number
	of open-enrollment charter schools imposed by Section 12.101(b).
	SECTION 17.  Subsection (b), Section 12.113, Education Code,
	is repealed.
	SECTION 18.  The amendment of Subchapter D, Chapter 12,
	Education Code, by this Act, does not affect the status of a charter
	granted under Subchapter D, Chapter 12, Education Code, before the
	effective date of this Act and the implementation of licensing
	under Subchapter D, Chapter 12, Education Code, in accordance with
	this Act.
	SECTION 19.  Sections 2 and 3 of this Act apply beginning
	with the 2012-2013 school year.  The remainder of the bill shall
	apply as soon as this Act takes effect.
	SECTION 20.  This Act takes effect immediately if it
	receives a vote of two-thirds of all the members elected to each
	house, as provided by Section 39, Article III, Texas Constitution.
	If this Act does not receive the vote necessary for immediate
	effect, this Act takes effect September 1, 2011.